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Sensata Technologies Holding N.V.'s SEC Filings

SENSATA TECHNOLOGIES HOLDING PLC filed this Form S-1/A on 03/09/2010
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the number of sensors and/or controls used within existing applications, or the development of new applications requiring sensors and/or controls;



the “mix” of products sold, including the proportion of new or upgraded products and their pricing relative to existing products;



changes in product sales prices (including quantity discounts, rebates and cash discounts for prompt payment);



changes in the level of competition faced by our products, including the launch of new products by competitors;



our ability to successfully develop and launch new products and applications; and



fluctuations in exchange rates.


While the factors described above impact net revenue in each of our operating segments, the impact of these factors on our operating segments can differ, as described below. For more information about risks relating to our business, see “Risk Factors—Risk Factors Related To Our Business.”


Cost of Revenue


We manufacture the majority of our products and subcontract only a limited number of products to third parties. As such, our cost of revenue consists principally of the following:



Production Materials Costs. A portion of our production materials contains metals, such as copper, nickel and aluminum, and precious metals, such as gold and silver, and the costs of these materials may vary with underlying metals pricing. We purchase much of the materials used in production on a global best-cost basis, but we are still impacted by global and local market conditions. We enter into forward contracts to hedge a portion of our exposure to the potential change in prices associated with these commodities. The terms of these contracts fix the price at a future date for various notional amounts associated with these commodities.



Employee Costs. These employee costs include the salary costs and benefit charges for employees involved in our manufacturing operations. These costs generally increase on an aggregate basis as sales and production volumes increase, and may decline as a percent of net revenue as a result of economies of scale associated with higher production volumes. We rely heavily on contract workers in certain geographies.



Other. Our remaining cost of revenue consists of:



sustaining engineering activity costs;



customer-related development costs;



depreciation of fixed assets;



freight costs;



warehousing expenses;



purchasing costs;



outsourcing or subcontracting costs relating to services used by us on an occasional basis during periods of excess demand; and



other general manufacturing expenses, such as expenses for energy consumption.